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The Venezuela Story; Lessons For Nigeria

Take a look at Venezuela

Venezuela is probably one of the worst places in the world to live in currently. People are virtually struggling to afford basic things like food, water, medicine - name it. For a nation that is rich in oil, and has the largest proven oil reserves in the world, it's quite unfortunate that this oil has turned out to be more of a curse than a blessing to the country. With a close look we can trace the Venezuelan crisis to oil; perhaps the nation's over reliance on oil revenue.

Because of the oil Venezuela has, they didn't bother to produce anything else or develop other sectors of their economy. The economy is totally dependent on oil exports as 95% of government revenue is derived from oil. Venezuela sells oil to other countries, and with the dollars it earns, imports all goods the country needs for sustenance. With the fall in oil prices by 2014, the import-dependent Venezuelan economy suffered a great deal because there was shortage of foreign currency in flow leading to high cost of importation. The prices of goods in the market increased astronomically with a resultant hyper inflation. In 2010, one American dollar was worth about eight bolivars. Today it's worth over 8,000 bolivars.

The government of Venezuela has also taken various policy decisions which put the economy at more disadvantage. President Maduro successfully increased the minimum wage about three times this year with the aim of gaining favor in the sight of the Venezuelan people. The minimum wage is currently 5 million Bolivars per month. Meanwhile, a roll of toilet paper costs 2.6 million bolivars. Basically, the people of Venezuela are millionaires and poor at the same time. Sad story. I can't even imagine the resultant effect of this economic downturn on the nation as a whole. The economy of a nation holds every other aspect of society together. If you get the economy wrong, every other sector goes wrong.

However, my goal here is not Venezuela, it's Nigeria. Because no matter how worse the Nigerian story is, if you take a good look at Venezuela you'd understand that it can always get worse for us. If we do not take practical economic Policy steps, we might end up like Venezuela in coming years.

Nigeria has a lot to learn from Venezuela. The Nigerian economy, just like Venezuela is heavily dependent on oil export. A huge chunk of federal government revenue is derived from oil. This is dangerous for us. Any negative movement in International oil price will affect us a great deal. Diversify the economy, strengthen other sectors. There is technology, tourism, Agriculture and so much more to invest in. We need to see beyond oil.

We must equally recognize the role of leadership in the current Venezuelan crisis. Nicolas Maduro and his predecessor obviously did not have a firm grasp of economics and would not seek help from experts. In the face of inflation Nicolas Maduro continued to Print so much money. The resultant effect is the hyperinflation facing them today. With so much money in circulation, the value of the currency will continue on a nose-dive. If we must learn from Venezuela, Nigeria must elect intellectuals into office. We've had our fair share of illiterate presidents. We need leaders who have a firm understanding of the economy and are willing to make the right economic decisions.

Before us today is a choice to make. A choice to tow the path of Venezuela or tow the path of Dubai. Both nations have oil but made different economic decisions.

We must choose today.

- Ifeanyi Chukwudi

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